Reflections on doing good with lump sums—the retired person’s dilemma

Many re­tired peo­ple are des­per­ately short of money, while oth­ers have too much. I am in the lat­ter group, and the ques­tion that con­cerns me is what to do with the sur­plus. I have a rea­son­ably gen­er­ous (fi­nal salary) pen­sion, and sav­ings and in­her­i­tances which are sev­eral hun­dred thou­sand (UK) pounds more than I could con­ceiv­ably need or want. What should I do?

The 10% giv­ing pledge doesn’t re­ally work for me for two rea­sons. First 10% of my (pen­sion) in­come is too lit­tle. I have a lump sum: how much should I give away (again, 10% is too low), and when? Se­cond, there are other wor­thy types of re­cip­i­ent as well as char­i­ties: fam­ily, “eth­i­cal” in­vest­ments and so­cial en­ter­prises of var­i­ous kinds, poli­ti­cal cam­paigns, lo­cal or­gani­sa­tions, and so on. There are ar­gu­ments in favour of all of these. How should I bal­ance these ar­gu­ments?

There must be lots of peo­ple in my po­si­tion be­cause of the gen­eros­ity of fi­nal salary pen­sion schemes, and the rise of house prices which means peo­ple get a lot of cash when they down­size or in­herit their par­ents’ homes. Effec­tive al­tru­ism, from what I can gather, seems to be a move­ment for the young, and those de­cid­ing on a ca­reer path. But I think the oldies are im­por­tant too.

I’ll di­vide my dilemma into three ques­tions:

1. The first is when to make a de­ci­sion. I think I should give my sur­plus money away grad­u­ally—say 10% a year—rather than giv­ing it all away at one time in the near fu­ture. If I were to give it away in one lump sum soon, I might change my mind and de­cide I’d made the wrong de­ci­sion. It feels like too big a de­ci­sion to make now. So I’ll give away, or oth­er­wise deal with, 10% of my sur­plus money each year. 10% is, of course, an ar­bi­trary figure. The other tra­di­tional op­tion is to make the de­ci­sion via one’s will. But I’ve de­cided I should do some­thing now.

2. The sec­ond ques­tion is how to di­vide the money be­tween the types of re­cip­i­ent—char­i­ties poli­ti­cal causes, so­cial en­ter­prises, fam­ily etc. In a more pre­dictable uni­verse I would be able to calcu­late how effec­tive a par­tic­u­lar poli­ti­cal cam­paign or so­cial en­ter­prise would be in achiev­ing my goals. In prac­tice this is not pos­si­ble, even in prin­ci­ple. The im­pact of poli­ti­cal cam­paigns or so­cial en­ter­prises is im­pos­si­ble to fore­cast ac­cu­rately, even in prob­a­bil­is­tic terms, and there can be no ob­jec­tive way of ar­bi­trat­ing be­tween, for ex­am­ple, differ­ent groups of sen­tient be­ings or time frames. Again all I can do is make an ar­bi­trary choice based on my per­sonal bi­ases. But this time I have no ready num­ber like 10%.

3. The third is the choice of or­gani­sa­tions or in­di­vi­d­u­als in each type. One pos­si­bil­ity is to go with the idea of GiveWell or a similar or­gani­sa­tion dis­tribut­ing my money for some of the char­i­ta­ble dona­tions (say 50%), but I am per­suaded that there is a case for lo­cal char­i­ties or those with which I have a per­sonal con­nec­tion be­cause these can­not be on the radar of the big char­ity eval­u­a­tors. And if ev­ery­one did this, and all sur­plus money were chan­nel­led to the “best” causes as as­sessed by self-ap­pointed ex­perts, I’m not con­vinced the world would be a bet­ter place. A bit, or a lot, of an­ar­chy is needed, I think. Espe­cially if the in­ter­net ten­dency to en­courage in­for­ma­tion mo­nop­o­lies kicks in and ev­ery­one con­sults the same or­a­cle.

Ob­vi­ously if one char­ity is clearly more effec­tive than an­other in terms of clear crite­ria, then the more effec­tive char­ity is the one to go for. In these cases anal­y­sis is ob­vi­ously a good idea.

But with some of the other is­sues anal­y­sis does not seem such a good idea. All it is likely to achieve is to de­lay or pre­vent any ac­tion. This is why I haven’t done much so far: over-anal­y­sis. There are is­sues where the un­cer­tain­ties are too big for any pre­dic­tions to be mean­ingful, or where we need to de­cide whether we want to help peo­ple lo­cally, peo­ple in poor coun­tries, an­i­mals, aliens on other plane­tary sys­tems (the first philan­thropic ges­ture that comes to mind is a space cap­sule with some recorded ad­vice from planet earth), now or at some time in the fu­ture. This is where we need to ap­peal to per­sonal prefer­ences. What do Ithink is the most wor­thy cause? Given that there is no use­ful anal­y­sis which could be mean­ingful, I need to make an ar­bi­trary, in­stinc­tive de­ci­sion.

One difficulty with this is that the peo­ple who call the shots are the peo­ple with the money to spare: the rich. What right have they got to con­trol the agenda? Bill Gates is a billion­aire be­cause his start-up struck lucky. Don­ald Trump is an elected poli­ti­cian, so isn’t there a demo­cratic case for sup­port­ing the Mex­i­can bor­der wall rather than the Gates foun­da­tion’s med­i­cal work?

I’m de­ter­mined to make some de­ci­sions soon and would be very grate­ful for any com­ments or ad­vice. Thanks.

I think the ques­tion how much to give over time in such situ­a­tion is a good one, and hope some­one will write a care­fully con­sid­ered an­swer.

I’d like to push back a bit on this part of the reasong

I am per­suaded that there is a case for lo­cal char­i­ties or those with which I have a per­sonal con­nec­tion be­cause these can­not be on the radar of the big char­ity eval­u­a­tors. And if ev­ery­one did this, and all sur­plus money were chan­nel­led to the “best” causes as as­sessed by self-ap­pointed ex­perts, I’m not con­vinced the world would be a bet­ter place. A bit, or a lot, of an­ar­chy is needed, I think. Espe­cially if the in­ter­net ten­dency to en­courage in­for­ma­tion mo­nop­o­lies kicks in and ev­ery­one con­sults the same or­a­cle.

We are cer­tainly not in a world where ev­ery­one would con­sult effec­tive al­tru­ist sources. On the con­trary, I think the cor­rect view is that ba­si­cally ev­ery­body gives to lo­cal/​fa­mil­iar char­i­ties ran­domly and based on emo­tional ap­peal, and just a very tiny frac­tion of peo­ple is in­fluenced by any ra­tio­nal ad­vice at all. If you are con­sid­er­ing EA view­point, you are an ex­cep­tion.

To put things in scale, the UK based “Dog Trust”, just one of many char­i­ties in the UK sup­port­ing pet well­fare, had an in­come £106.4m in 2017. In com­par­i­son, the Anti-malaria foun­da­tion, for many years a top char­ity in GiveWell lists, had an an­nual in­come just $46,8m. Ob­vi­ously the dogs in the UK are closer to peo­ple there than the peo­ple AMF is helping.

So to a first ap­prox­i­ma­tion, I think you can say that al­most no­body gives effec­tively, and ev­ery­body gives ran­domly to char­i­ties based on availa­bil­ity heuris­tics and similar. Based on this rea­son­ing I would ex­pect if you sup­port more an­ar­chy, you will ba­si­cally do what ev­ery­body is do­ing any­way, and the im­pact of that will be small to neg­ligible. I would ex­pect giv­ing to effec­tive char­i­ties, EA funds, and EA meta-char­i­ties to be bet­ter for al­most any goal you may have.

You can always do more than the Giv­ing What We Can min­i­mum of 10%, but it is true it is aimed at pre-re­tire­ment in­come. Bolder Giv­ing en­courages com­mit­ting 50% of lump sums or in­come, so this might be more ap­pro­pri­ate for you. It does not re­quire effec­tive­ness, though there are a num­ber of EAs on the site.

“Given that there is no use­ful anal­y­sis which could be mean­ingful, I need to make an ar­bi­trary, in­stinc­tive de­ci­sion.”

I agree that analysing which char­i­ties best match your goals is difficult, but I’m sur­prised that you don’t think there’s any use­ful anal­y­sis out there—es­pe­cially since you’re ob­vi­ously in­volved with EA! Can you ex­plain that to me?

I would challenge your no­tion that you are over-an­a­lyz­ing the prob­lem and that you must make a defini­tive de­ci­sion soon.

1. In gen­eral, bet­ter knowl­edge and in­for­ma­tion leads to bet­ter de­ci­sion mak­ing. If you are new to the EA com­mu­nity or to think­ing deeply about philan­thropy more gen­er­ally, it is very un­likely that your cur­rent no­tions of how to give are ap­pro­pri­ate.

2. Once you give away money, you can­not get it back. But money you save now can always be given away later. This ar­gues for wait­ing in the pres­ence of un­cer­tainty. For ex­am­ple, in the op­ti­mal stop­ping Sec­re­tary Prob­lem, you should see and just re­ject the first 37% of all can­di­dates be­fore you even be­gin your eval­u­a­tion pro­cess.

3. There are tremen­dous con­se­quences to your ac­tions so you shouldn’t take this mat­ter lightly. Go­ing with your gut and in­tu­ition is not the ap­pro­pri­ate re­sponse sim­ply be­cause you find your dilem­mas to be difficult and over­whelming. Us­ing GiveWell’s lat­est model, you can ex­pect to save a life for prob­a­bly $2500 or less. Since you have sev­eral hun­dred thou­sand pounds, you could save over 100 peo­ple with what you have. You could be like Oskar Sch­indler. Please don’t waste this pre­cious op­por­tu­nity.